Post Bankruptcy Personal Loans: Fast Approval Despite Bad Credit Histories

There is a school of thought that bankruptcy is effectively the end of any kind of credit deal. Traditional lenders certainly are reluctant to lend money to anyone who has been declared bankrupt at least 2 years prior to an application. But it is possible to get post bankruptcy personal loans.

The logical behind the thinking is fair, with lenders entitled to be cautious about approving applicants seeking approval with poor credit histories, but it is worth noting that bankruptcy does not mean an end to income and financial responsibility.

What this means is that receiving personal loan repayments is still possible, especially when the specific hardship which prompted bankruptcy proceedings has been overcome. And if this is the case, the lenders can still feel confident in granting loan approval.

The Truth of Your Situation

But how can someone that has been declared bankrupt not find themselves avoided by a lender, whether they are traditional lenders or online lenders? Knowing the truth of the bankruptcy situation is the key. Once this is understood, the route to a post bankruptcy personal loan is clearer.

The lending world has a vast variety of lenders in it, and there are some lending firms that specialize in post bankruptcy loans. In fact, given that such applicants have no existing debt to figure into the equation the chances of default are extremely low. For that reason, approval with poor credit histories is plausible.

Also, lenders are willing to accept that bankruptcy was likely the only way out of an impossible financial situation.

Recent years have seen the number seeking bankruptcy increase, so it no longer reflects terribly on a personal loan applicant.

The Significance of the Debt-To-Income Ratio

So, what is the fuss about not having existing debts anymore? That question might seem strange, but the explanation is pretty straightforward. Like any other loan, a post bankruptcy personal loan needs to fit within the debt-to-income ratio set by the lending industry.

The ratio states that a maximum 40% of available income can be used to repay debts. But since there is no existing debt, that means the repayment sum each month can be quite high. This automatically means that, even with a large loan, getting approval with poor credit histories is easier.

For example, if an applicant earns $4,000 per month, then the maximum to commit to repaying loans is $1,000. With no other debts, it means the repayment on the personal loan can be $1,000, thereby making a 3-year loan of around $30,000 affordable.

How To Qualify

It is worth noting that post bankruptcy personal loans are staggered according to the period of time that has elapsed since the ruling was made. So, it is extremely difficult to get a loan 3 months after being declared bankruptcy, but not so difficult after 2 years.

However, loans of perhaps no more than $3,000 are available for the first 12 months, and after that $5,000 up to $10,000 can be secured. Of course, getting approval with poor credit histories is never guaranteed, but collateral can make a huge difference.

However, it is advisable to take out small personal loans as soon as possible because repaying them allows the borrower to begin to rebuild their credit rating.

Bankruptcy Personal Pros and Cons

There are facts to consider before deciding to file bankruptcy personal. One of the most frequent reasons why people are afraid of bankruptcy personal is the fear of spending too much time in the court at hearings. Another reason is the unpleasant feeling that your financial matters are discussed as if under the microscope. On the other hand, bankruptcy personal can be the only way of eliminating debts and of having a chance to start a new financial life.

People tend to think that there are more bankruptcy personal cons than pros and this fact can be true especially in case of people with pessimistic life perspective. However, there are true facts that are considered cons and can be serious arguments for doing whatever it takes to avoid bankruptcy personal. One of these cons is that the debtor can loose all his properties or assets of value, equity in a home.

Bankruptcy personal is considered an expensive process, as trustee, courts and fees are to be paid from debtor’s assets. In case the debtor is a business owner, the employees can be dismissed and the commercial enterprise sold in order to pay the creditors. Hardy can a debtor obtain a so-called alternative to bankruptcy personal, as there are some requirements stated in the bankruptcy law. This type of bankruptcy personal allows the debtor to keep his valuable assets and pay the debts over a period of time if there is reliable reorganization plan presenting anticipated income.

Wise financial consultants sustain the idea that once experiencing bankruptcy personal the debtor starts taking seriously financial responsibilities, becoming organized and balanced concerning extravagant expenses. The debtor can be motivated to do everything in order not to suffer the same financial troubles. In a way, bankruptcy personal makes you wiser and more responsible regarding bills and expenses. On the other hand, bankruptcy personal is the only solution to escape headaches and nightmares of dealing with lots of creditors, debts and financial troubles of other nature. Bankruptcy personal removes the uncertainty, the worries and in some cases more expenses.

After bankruptcy personal getting a loan is a real adventure, as lenders tend to accept bankruptcy personal loans at least after two years have passed since the event. In some cases a down payment is necessary in order to obtain a bankruptcy personal home loan. In most of the cases when a post-bankruptcy personal loan is accepted the proof of a flawless payment history is necessary. In case the bankrupt is found dishonest or culpable some bankruptcy restrictions are imposed.

The fact that the debtor should pay on time his bills after bankruptcy personal can be a good fact, giving the opportunity of starting fresh and of becoming organized and responsible. One of the pros of bankruptcy personal is that creditors are forced to accept less money than the debtor owes.

Except the impression of experiencing a microscopic inspection of the financial matters and some unpleasant consequences, bankruptcy personal can be considered in some cases a relief and a chance to start in a wise way a new life.

Post Bankruptcy Personal Loans: How To Get The Green Light

It might seem that the hardest thing in the world to do is to secure a loan after having been declared bankrupt. In fact, there are options available to bankruptees, and those who have recently come out of that status. But when applying for a post bankruptcy personal loan, there are certain issues that need to be addressed.

There is no point in denying that bankruptcy does not have a negative effect on the status of loan applicants. Lenders are more cautious about submissions from them, but it is worth noting that they are interested mainly in understanding the reasons for bankruptcy rather than the fact itself. That is why loan approval after bankruptcy is possible.

So, what are the points to consider and factors to pay most attention to when seeking a personal loan in these circumstances? Few are really any different to normal, but qualifying for the loans in the first place usually requires some extra effort if lenders are to trust your commitment to repaying a loan is intact.

Your Negative Image

In truth, that image of irresponsibility is the first matter that needs to be addressed before applying for a post bankruptcy personal loan. While lenders are willing to hear applicants out regarding the reasons for filing for bankruptcy, they are still concerned that that route is seen as an easy option when things get difficult.

When assessing your application, lenders will take a careful look at why bankruptcy was sought, and this can affect their impression. For example, if there was a history of purchasing, it suggests a foolish attitude towards money. But if there was an unexpected redundancy, then it suggests bad luck. The latter reason is most likely not to impede the quest for loan approval after bankruptcy.

Also, setting about improving your credit rating before submitting your personal loan application can play a big part in getting the green light. This can be done by taking out a small payday loan and repaying it immediately. These are indicators rather than any grand gestures.

Other Moves To Improve Credit Rating

The issue with bankruptcy is that it effectively bans the bankruptee from securing credit deals for a period of time – usually 2 years. However, the stigma remains for up to a decade, so there is a challenge in securing a post bankruptcy personal loan.

The only reason that a payday loan might be secured is that it is granted on the back of an upcoming paycheck, with payments taken directly from the bank account of the borrower. It means the chances of default are extremely low. But there are other steps that can help to secure approval after bankruptcy.

For example, take out a secured credit card. This is easy to get as the card limit is covered by a deposit, so banks are willing to grant them despite bankruptcy. Repaying the interest every month without fail also sends the right image, thus helping when it comes to applying for a personal loan. Opening a savings account and making deposits in it regularly is also a good idea.

Use A Cosigner

Finally, arguably the best thing to do to convince a lender to grant a post bankruptcy personal loan is to find a cosigner. This is someone who promises to make repayments if the borrower is not able to make it, so there is a guarantee that the repayments will be made without fail.

If the cosigner qualifies for approval – with an excellent credit history behind them and a good income – then it is easy to secure approval after bankruptcy. However, it is essential that the right person is found – and this can be the challenge. But to get a personal loan under the circumstances, it is the best bet.